Betfair dismisses £910m bid but it’s still 'game on'

Betfair oday dismissed a £910 million takeover bid from a consortium led by CVC Capital Partners, but the City continued to assume that the gambling group is now effectively “in play” following the offer.

The betting exchange, which pioneered the concept of customers punting against each other rather than  the bookmaker, said the 880p offer price “fundamentally undervalues” the business.

However, it is notably higher than the present share price, which has always languished well below the £13 at which it optimistically joined the stock market in October 2010.

Today the stock added 30p, or 4%, to 834p, still well below the value  of the offer, which suggests investors don’t think CVC has any chance of  success on the present terms. Nevertheless, it could come back with a better deal.  Some in the City say £10  a share is the price at which it gets intriguing.

Peel Hunt said: “While the offer is not a knockout bid, it is an interesting starting point. The risk is that CVC see themselves as a potential stalking horse for an industry buyer — an industry player could then bide its time.”

CVC, the private-equity house that owns Formlua One, has the backing of significant Betfair shareholders Antony Ball and Richard Koch.

Betfair is under pressure to show that it has not lost its way. Chairman Gerald Corbett said: “We have a unique business with a market position, profitability, cash flow and prospects that this proposal fails to recognise.”

Betfair reported losses of £64 million In the six months to October. It has seen a hit to revenues after pulling out of markets where gambling regulations are unclear or outright hostile. CVC now has until May 16 to come back with a  formal offer. Its informal one comprised of cash, unlisted shares and loan notes.